PAAB clarifies reporting standards

THE Public Accountants and Auditors Board (PAAB) says companies should use the United States dollar as presentation currency for 2018 financial statements.

This was after several companies listed on the Zimbabwe Stock Exchange (ZSE) had delayed publishing their financial results for the period under review waiting for guidelines from the regulator.

“Since there was no official and legal local currency prior to the 22nd of February 2019, in particular given the provisions of Statutory Instrument 33, the presentation currency of most entities in the country is expected to remain as the United States dollar as at December 31, 2018 and for the year then ended.

“This is a matter, however, that remains the sole prerogative of directors or those charged with governance of respective entities,” PAAB said in a statement. The accounting body noted that notes to the financial statements dealing with the functional and presentation currencies should be expanded to include a detailed description of currency and be appropriately referenced to the events arising after the reporting date note which will be expected to cover the introduction of the RTGS dollar, amongst other relevant developments.

Most companies obligated to publish their accounts including listed companies, banks and insurance companies had postponed release of their earnings for the just ended year as well as respective six months period earnings to December beyond their obligated deadlines citing functional and presentation currencies challenges which emerged following the October 2018 and the February 2019 pronouncements as well as emerging market dynamics.

This resulted in the local bourse also extending the publishing of results for publicly-listed firms by one month.  In its review the board noted that S.I. 33 of 2019 possibly presented challenges in terms of compliance with IFRSs due to possible conflict with IAS 21 for some entities.
IAS 21 requires the use of a spot rate in accounting for transactions whereas during the 2018 financial year, some entities experienced premiums and discounts on the official foreign exchange rate of 1:1 between the RTGS balances and Bond Notes and the USD.
On the other hand, some entities operating in Zimbabwe applied a multi-tiered pricing structure during the period under consideration, where a single product had different prices depending on the mode of payment, whether USD cash, electronic payment, mobile money or bond notes.

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